Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades. Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows: From Design 400 Part 1 (Algo) To Programming Department A Department B 5,000 1,000 600 Design Programming The costs in the two service departments are as follows: Labor and materials (all variable) Depreciation and other fixed costs Total Design $ 101,000 70,600 $ 171,600 9,000 1,000 Programming $ 66,600 4,000 $ 70,600 Total Labor Hours 15,000 2,000 Required: 1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades. Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows: From Design 400 Part 1 (Algo) To Programming Department A Department B 5,000 1,000 600 Design Programming The costs in the two service departments are as follows: Labor and materials (all variable) Depreciation and other fixed costs Total Design $ 101,000 70,600 $ 171,600 9,000 1,000 Programming $ 66,600 4,000 $ 70,600 Total Labor Hours 15,000 2,000 Required: 1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Accounting Information Systems
10th Edition
ISBN:9781337619202
Author:Hall, James A.
Publisher:Hall, James A.
Chapter16: Auditing It Controls Part Iii: Systems Development, Program Changes, And Application Auditing
Section: Chapter Questions
Problem 3P
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Question
![Problem 7-34 (Algo) Departmental Cost Allocation; Outsourcing [LO 7-1, 7-3]
[The following information applies to the questions displayed below.]
Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These
products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for
large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades.
Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two
support departments, systems design and programming services. The sources and uses of the support department time
are summarized as follows:
Design Programming
5,000
From
Design
Programming
The costs in the two service departments are as follows:
Part 1 (Algo)
-
400
Labor and materials (all variable)
Depreciation and other fixed costs
Total
To
Department A Department B
1,000
600
a. Direct Method
b. Step Method (Design Department goes first)
c. The Reciprocal Method (using Solver)
Design
$ 101,000
70,600
$ 171,600
Department A
9,000
1,000
Programming
$ 66,600
4,000
$ 70,600
Required:
1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method
(design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to
nearest whole dollar amount.)
Department B
$
$
$
Total
Labor
Hours
15,000
2,000
Total
0
0
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc7690f8-b325-4d5a-9f9b-75c74601b71f%2F389f78ee-1524-418e-b18d-1018db4daba7%2Fabf17ugj_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 7-34 (Algo) Departmental Cost Allocation; Outsourcing [LO 7-1, 7-3]
[The following information applies to the questions displayed below.]
Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These
products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for
large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades.
Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two
support departments, systems design and programming services. The sources and uses of the support department time
are summarized as follows:
Design Programming
5,000
From
Design
Programming
The costs in the two service departments are as follows:
Part 1 (Algo)
-
400
Labor and materials (all variable)
Depreciation and other fixed costs
Total
To
Department A Department B
1,000
600
a. Direct Method
b. Step Method (Design Department goes first)
c. The Reciprocal Method (using Solver)
Design
$ 101,000
70,600
$ 171,600
Department A
9,000
1,000
Programming
$ 66,600
4,000
$ 70,600
Required:
1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method
(design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to
nearest whole dollar amount.)
Department B
$
$
$
Total
Labor
Hours
15,000
2,000
Total
0
0
0
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